Fluorescence-based photodynamic therapy has proved its potential for identifying abnormal cells, assessing prognosis, and monitoring disease. But the present photodynamic instruments are too costly, too complex, and lack sensitivity required for early tumor diagnosis. The major challenge of this technology is to build an optical fiber system which can efficiently isolate the signal from the background, accurately resolve the fluorescence profile, and properly process the data to increase signal-to- noise ratio. In response to the need for this technology, Physical Optics Corporation (POC) proposes a compact versatile fiber-optic system for early cancer diagnosis. This system uses POC's novel holographic filters, wavelength division multiplexers (WDM), and optical signal processing. The resulting detector will be extremely compact and highly rugged, requiring little maintenance. POC's fiber optic system will be easy to deploy under clinical conditions. The proposed method allows detection of fluorescence- marker concentrations as low as 1.3 ng/ml in tissues. This is two orders of magnitude better than the existing systems.